BAE Systems Valuation

Is BA. undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of BA. when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: BA. (£13) is trading below our estimate of fair value (£16.13)

Significantly Below Fair Value: BA. is trading below fair value, but not by a significant amount.


Key Valuation Metric

Which metric is best to use when looking at relative valuation for BA.?

Key metric: As BA. is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for BA.. This is calculated by dividing BA.'s market cap by their current earnings.
What is BA.'s PE Ratio?
PE Ratio21.1x
EarningsUK£1.84b
Market CapUK£38.90b

Price to Earnings Ratio vs Peers

How does BA.'s PE Ratio compare to its peers?

The above table shows the PE ratio for BA. vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average20.2x
RR. Rolls-Royce Holdings
19.1x-0.09%UK£44.5b
BAB Babcock International Group
13.6x14.2%UK£2.6b
QQ. QinetiQ Group
17x13.9%UK£2.4b
CHG Chemring Group
31x22.2%UK£963.8m
BA. BAE Systems
21.1x7.7%UK£38.9b

Price-To-Earnings vs Peers: BA. is expensive based on its Price-To-Earnings Ratio (21.1x) compared to the peer average (20.2x).


Price to Earnings Ratio vs Industry

How does BA.'s PE Ratio compare vs other companies in the European Aerospace & Defense Industry?

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
BA. 21.1xIndustry Avg. 23.4xNo. of Companies9PE020406080100+
0 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: BA. is good value based on its Price-To-Earnings Ratio (21.1x) compared to the European Aerospace & Defense industry average (23.4x).


Price to Earnings Ratio vs Fair Ratio

What is BA.'s PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

BA. PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio21.1x
Fair PE Ratio24.9x

Price-To-Earnings vs Fair Ratio: BA. is good value based on its Price-To-Earnings Ratio (21.1x) compared to the estimated Fair Price-To-Earnings Ratio (24.9x).


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst BA. forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUK£13.00
UK£14.59
+12.2%
7.8%UK£16.30UK£11.80n/a17
Nov ’25UK£12.69
UK£14.45
+13.9%
7.0%UK£16.00UK£11.80n/a17
Oct ’25UK£12.74
UK£14.43
+13.3%
7.1%UK£16.00UK£11.80n/a17
Sep ’25UK£13.63
UK£14.41
+5.7%
6.8%UK£16.00UK£11.80n/a18
Aug ’25UK£12.85
UK£14.34
+11.6%
6.7%UK£16.00UK£11.80n/a18
Jul ’25UK£12.72
UK£14.16
+11.3%
7.4%UK£16.00UK£11.80n/a18
Jun ’25UK£13.92
UK£14.00
+0.6%
6.6%UK£15.50UK£11.80n/a18
May ’25UK£13.38
UK£13.61
+1.7%
6.8%UK£15.00UK£11.80n/a18
Apr ’25UK£13.50
UK£13.38
-0.8%
7.1%UK£14.50UK£11.80n/a18
Mar ’25UK£12.50
UK£12.98
+3.9%
7.1%UK£14.50UK£11.80n/a19
Feb ’25UK£11.70
UK£12.16
+4.0%
5.9%UK£13.50UK£10.70n/a19
Jan ’25UK£11.11
UK£11.85
+6.7%
6.0%UK£13.00UK£10.60n/a19
Dec ’24UK£10.60
UK£11.77
+11.1%
5.5%UK£13.00UK£10.60n/a19
Nov ’24UK£11.18
UK£11.52
+3.1%
5.1%UK£12.51UK£10.20UK£12.6919
Oct ’24UK£9.98
UK£11.42
+14.5%
5.3%UK£12.51UK£10.20UK£12.7419
Sep ’24UK£10.08
UK£11.35
+12.6%
6.7%UK£12.51UK£9.09UK£13.6319
Aug ’24UK£9.33
UK£10.71
+14.7%
11.1%UK£12.08UK£7.00UK£12.8519
Jul ’24UK£9.27
UK£10.62
+14.6%
10.9%UK£12.08UK£7.00UK£12.7219
Jun ’24UK£9.45
UK£10.34
+9.5%
11.2%UK£11.75UK£7.00UK£13.9218
May ’24UK£10.14
UK£10.25
+1.0%
10.7%UK£11.55UK£7.00UK£13.3817
Apr ’24UK£9.83
UK£10.21
+3.9%
10.4%UK£11.50UK£7.00UK£13.5017
Mar ’24UK£9.05
UK£10.11
+11.7%
10.2%UK£11.46UK£7.00UK£12.5017
Feb ’24UK£8.54
UK£9.59
+12.3%
10.0%UK£11.00UK£7.00UK£11.7015
Jan ’24UK£8.56
UK£9.22
+7.7%
11.0%UK£11.00UK£7.00UK£11.1114
Dec ’23UK£8.15
UK£9.22
+13.2%
11.0%UK£11.00UK£7.00UK£10.6014
Nov ’23UK£8.21
UK£9.02
+9.9%
9.4%UK£10.20UK£7.00UK£11.1814

Analyst Forecast: Target price is less than 20% higher than the current share price.


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